Starting a web business

Marcus appreciated the importance of SEO long before anyone else

Krystena Petrakas: What was your previous career?

Marcus Simmons: I was a management consultant in manufacturing, but 9/11 meant I had to change my career path, as did many! My career and earnings dried up so I was forced into starting something new.

KP: How did it feel being ‘forced’ into business?

MS: Other people lost a lot more, so I managed.

I had been chatting with an old school friend and we did a few web experiments. I saw search engines, such as Google being important - we focused on developing our business with that in mind.

However, in 2002 people would say: “What’s Google, and how does that impact my business?” We had something very valuable, but not many businesses realised it so we couldn’t make any money.

We had something very valuable, but not many businesses realised it so we couldn’t make any money

 

Ultimately I put my money where my mouth is and set up my own website business!

KP: How did you decide which sector to go into?

MS: For many areas you needed a business partner and because people didn’t value what we would bring, we were negotiating at a disadvantage.

However, with the travel and accommodation sector you didn’t need a partner; you could just set up.

KP: Tell us how you financed the start-up…

MS: Fundamentally it involved a huge amount of sacrifice! I remortgaged my house, moved home and downsized.

Early on in the business launch I realised money was dwindling, so I went cap-in-hand to my parents.

I also learnt that every cloud has a silver lining: my grandmother died around the same time, but her inheritance money helped to start the business.

Eventually we got funding through the bank, but only after quite a lot of sacrifice!

KP: How did it feel to make those sacrifices?

MS: I managed due to necessity. To make matters worse I was also going through a divorce! In financial terms I went from a stable financial situation to a very unstable one.

However, it also meant I had nothing to lose. I felt I could sacrifice everything, have a simple life and concentrate 100% on building the business.

Now I’m remarried with a family, I don’t think it would have been possible to sacrifice as much as I did if I’d had a family back then.

KP: So did you start as a work-from-home business?

MS: Yes – now we rent office space. The current economic climate, funnily enough, has been good for our business: we’ve been able to get cost-effective office space and recruit some exceptional people who pre-recession might have gone to more established businesses.

KP: How did things go in the early days?

MS: We had to make sure people would try out our first website, iknow-Yorkshire, so we offered a free trial for accommodation owners. Getting people to try the website was a key, because we didn't just buy from an established website for sale like so many entrepreneurs can do now, we had to start from scratch.

It took a while to establish the business. In the first year we lost more money then we sold, we made quite a big loss. In the second year we got a lot of that money back.

By year three the business started to stand on its own two feet. The business has accelerated in the last 18 months: back then there was less then 20 staff, now we have 55.

KP: How has the growth spurt impacted on your personal life?

MS: My working hours are now respectable and I hardly do any weekend work. I feel like I can now work a normal life.

KP: What do you most enjoy in running your own business?

MS: I enjoy seeing the difference we make to our customers. If you’re a small B&B and you make half or more of your business from the website, it’s very motivating for me as a website entrepreneur.

KP: Has anything frustrated you?

MS: A web business can look financially weak because of the lack of assets and investment. That is a constant frustration. No matter how well the business is run, the only way to improve is to get more sales.

KP: So what’s the big advantage with a web business?

MS: It’s a double-edged sword: it’s a low-cost start-up, but from a traditional business point of view your balance sheet and account can look weak because of the low-cost. So the advantage can also be a disadvantage.

KP: What advice would you give to web entrepreneurs?

MS: Identify how to reach your audience. Some people think customers will naturally flock to the website – that’s far from the truth.

Also get your technology right. If your website does succeed you will quickly outgrow your technology.

Grow your technology in relation to the growing audience. It’s crucial you have the right employees to advise you in this regard.

KP: Any other tips for new entrepreneurs…

MS: People can offer what may appear to be good ideas, especially if you’re financially struggling – but be cautious! For example, if a casino business wants to plaster adverts all over your website, on first glance it may seem financially attractive, but it will actually destroy everything you’re building, and people won’t be attracted to your site anymore.

KP: Would you do anything differently if you did it all again?

MS: I was naïve and didn’t have the confidence I have now. I didn’t know I would produce a multimillion pound business, but had I known that I would have funded more aggressively from the start.

Also, instead of simply not taking a salary, I would have put more money into the business and drawn it out as a small salary. This is purposely for bank managers, as not taking a salary doesn’t rub with them – they prefer to see you put the money in and slowly pay it out, rather then keeping it to yourself and living frugally.

KP: What does the future hold for your business?

MS: We have now branched out from accommodation and deal with hospitality, concentrating on the destination and associated aspects, something that’s continually growing.

We’re rolling out all sites and propose to cover the whole of the UK by early 2011.

Listen to The next Group On? Setting up a group-buying voucher website